‘Squeezed generation’ struggling to support parents and children

The Co-operative Bank warned of a “real and increasing financial pressure” on the generation which is simultaneously financing two other ones as living costs have soared amid population changes, with people having children later in life and also living for longer.

One in seven adults is estimated to be providing support to both the upper and lower generations, and two thirds of them feel this is putting them under strain, the report found.

While a woman can expect to live to the age of 82 and men are living to 78 on average, nearly half of babies are being born to mothers aged 30 and over, the study said.

More than half of those studied said the extra pressure from supporting two generations is preventing them from having the lifestyle they had hoped for as their children reach adulthood.

Parents who have children at home who are aged under 18 were found to be the worst hit financially, paying out on average £3,505 a year to support their children and parents – equating to almost a fifth of the average UK take home wage.

Even when the children have flown the nest, the “squeezed generation” was still found to be paying £2,543 a year to finance both generations.

Family budgets have come under intense pressure from high living costs, high unemployment and low returns on savings, although there are some signs of improvement as inflation eases.

Recent studies have also suggested that cautious households are raiding their savings to make ends meet as interest rates remain low, rather than taking out loans.

The main areas of financial support being given were found to include everyday living costs, such as food and household bills, trips out, holidays, emergency home repairs, transport and helping to pay off debts.

Robin Taylor, head of banking at the Co-operative, said: “The report shows how the changing nature of modern families and cost pressures of living in the current economic climate are placing real financial pressures on the shoulders of today’s middle generation.

“Compared with previous generations, the higher costs of housing, providing care for the elderly and everyday living, have resulted in a squeezed generation, who are having to re-adjust their views of the lifestyle they thought they would have been enjoying at their age.”

The Modern Families and Households Report uncovered regional variations, with adults in London providing the most financial support for their parents and children, at £360 a month.

Young adults in the South East were found to be the oldest when they fly the family nest, at almost 27 years of age on average.

Adults in the North East were found to supply the greatest level of financial backing to their parents, at £198 a month, compared with a national average of £146.

Those living in Wales and the Midlands were the most likely to feel that they have been prevented from having the lifestyle they hoped they would have been enjoying, as a result of the financial help they are giving to their children and parents. People in Yorkshire were found to be the least likely to be financially squeezed.

The difficulty faced by younger people in getting on the property ladder, many of whom are saddled with university debts as they navigate the tough employment market, was also highlighted.

Estate agents recently reported the first-time buyer share of the market had slumped to a seven-month low, and borrowers with lower deposits are expected to have a particularly tough time obtaining a mortgage in the coming months.

At 25 to 34 years of age, almost one in five children still lives in the parental home, and at 35 to 44 years of age, almost one in 20 are still under the parental roof, the report said.

The average UK house price is still more than £160,000, despite the patchy market, and in London the typical property price tops £365,000.